Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO2 emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage'. The diesel supplement increased to 4% from 6 April 2018. It is removed altogether for diesel cars which are certified to the Real Driving Emissions 2 (RDE2) standard. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2019/20 is £24,100.

2020/21 sees the introduction of a new range of bands with appropriate percentages ranging from 2%-19% for ultra-low emission vehicles (ULEVs) emitting less than 75 g/km of CO2. Cars with emissions over this amount would see the appropriate percentage set at the lesser of: 20%, plus 1% for each 5 g/km by which emissions exceed 75 g/km; and 37%.

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT for which they may use the flat rate valuation charge.

Company vans

The taxable benefit for the unrestricted private use of vans is £3,430 for 2019/20. There is a further £655 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge

Van £

Fuel £

Total £

Tax (20% taxpayer)

686.00

131.00

817.00

Tax (40% taxpayer)

1,372.00

262.00

1,634.00

Tax (45% taxpayer)

1,543.50

294.75

1,838.25

Employer’s Class 1A NICs

473.34

90.39

563.73

There is a benefit charge for zero emission vans but there is no fuel benefit for such vans.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The fuel only advisory rates below relate to company cars only and apply from 1 September 2018.

Vehicle

First 10,000 miles

Thereafter

Car / Van

45p

25p

Motorcycle

24p

24p

Bicycle

20p

20p

Car - fuel only advisory rates

Engine Capacity

Petrol

Diesel

LPG

1400cc or less

12p

10p

7p

1401cc to 1600cc

15p

10p

9p

1601cc to 2000cc

15p

12p

9p

Over 2000cc

22p

13p

13p

CO2 emissions

Appropriate percentage

(g/km)

Petrol %

Diesel %

0-50

16

20

51-75

19

23

76-94

22

26

95-99

23

27

100-104

24

28

105-109

25

29

110-114

26

30

115-119

27

31

120-124

28

32

125-129

29

33

130-134

30

34

135-139

31

35

140-144

32

36

145-149

33

37

150-154

34

37

155-159

35

160-164

36

165 and above

37

Plug-in grants

The government has reformed the plug-in grant scheme, which offers grants towards the purchase of new qualifying ultra-low emission cars. The scheme will now focus on zero emission models such as pure electric and hydrogen fuel cell cars. By 9 November 2018 at the latest, the grant rate for Category 1 vehicles will reduce from £4,500 to £3,500 and Category 2 and 3 vehicles will no longer be eligible. The government has rolled out new plug-in van and motorcycle grants.

Vehicle Excise Duty (VED) rates

VED bands and rates from 1 April 2019 for cars first registered on or after 1 April 2017

For the first year this is based on CO2 emissions. However, new diesel vehicles registered after 1 April 2018 that do not meet the RDE2 standard will be charged a supplement on their First Year Rate to the effect of moving up by one VED band.

After the first year, all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and all other petrol or diesel vehicles will pay a standard rate of £145 a year. An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000 (including zero emission vehicles). This additional rate of £320 will be payable each year for five years from the end of the first vehicle licence. After the five year period the standard rate will apply.

The government proposes to change to the new worldwide harmonised light vehicle testing procedure (WLTP) for measuring CO2 emissions.

Standard rates which apply from 1 April 2019 for cars registered from 1 March 2001 to 31 March 2017

VED Band

CO2 emissions (g/km)

Standard rate

A

Up to 100

£0

B

101 - 110

£20

C

111 - 120

£30

D

121 - 130

£125

E

131 - 140

£145

F

141 - 150

£160

G

151 - 165

£200

H

166 - 175

£235

I

176 - 185

£260

J

186 - 200

£300

K*

201 - 225

£325

L

226 - 255

£555

M

Over 255

£570

*Includes cars emitting over 225 g/km that were registered before 23 March 2006.

CO2 emissions (g/km)

First Year Rate

0

£0

1 - 50

£10

51 - 75

£25

76 - 90

£110

91 - 100

£130

101 - 110

£150

111 - 130

£170

131 - 150

£210

151 - 170

£530

171 - 190

£855

191 - 225

£1,280

226 - 255

£1,815

Over 255

£2,135

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